NASHVILLE -- After all the sensible explanations about why Toyota is closing down its manufacturing headquarters in Erlanger, Ky., there is still one other factor: the consolidation of the U.S. airline industry.
Blame it on Delta.
For 18 years, Toyota has run a robust organization in Erlanger -- which is really a commuter community just south of the Ohio River from Cincinnati.
Erlanger has been the hub for production planning, purchasing, manufacturing engineering, tooling, legal, human resources, supplier development and all those other difficult tasks that go into coordinating Toyota’s vehicle and engine factories in Kentucky, Alabama, Mexico, Mississippi, Canada, West Virginia, Tennessee, Missouri and California. (Yes, Toyota still builds things in California.)
But in relocating its California sales headquarters to Plano, Texas, Toyota also will close Erlanger and disperse its various functions to different sites. No more consolidated manufacturing management.
Still make perfect sense?
It does if you factor in the Cincinnati airport.
Cincinnati’s airport, which is also on the south side of the Ohio River, has itself been a booming hub for travel while Toyota deepened its roots there. As a major Delta hub, there were easy, direct flights seemingly everywhere for Erlanger’s 1,600 continent-traveling personnel. Delta offered 600 daily flights out of Cincinnati. There were four daily direct flights just to San Francisco, which is not an insignificant offering east of the Mississippi and South of the Ohio. And there was also Delta’s Comair subsidiary there, which offered small-jet service to little towns all over the country. Among them was a fast, direct hop into Huntsville, Ala., where Toyota runs a major engine plant.
But Delta began phasing down the hub in 2009 after it merged with Northwest Airlines. And in late 2012, it pulled the plug on Comair altogether. Today about two-thirds of the airport sits unused. Direct flights are limited. To get to that Huntsville engine plant now, Erlanger’s managers have to fly the opposite direction to make a connection through -- guess where? -- Detroit.
Cincinnati isn’t the only American city to be left high and dry by the changing directions of airlines as they try to make themselves competitive. Decades ago, there were also American towns that stagnated when the new federal interstate came through two counties away.
But it is awfully hard to run a centralized management headquarters from a spot like that when you need quick access to operations in this direction and that direction.
Toyota has built its American empire in a very geographically diverse way. It enjoyed a good support infrastructure to make that possible. In relocating to the Dallas area, Toyota is moving to not only a different corporate plan, but a different geographical plan. The thriving airports of Dallas and Detroit will be crucial.